© Reuters. FILE PHOTO: China’s and U.S.’ flags are seen printed on paper in this illustration taken January 27, 2022. REUTERS/Dado Ruvic/Illustration
By Kevin Yao
BOAO, CHINA (Reuters) -China’s securities watchdog is holding regular talks with U.S. regulators over audit cooperation and expects a deal soon, a Chinese regulatory official said on Thursday about a dispute that could lead to delistings of U.S.-listed Chinese companies.
The comments by Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), represent the latest gesture from Beijing that it is willing to solve the long-standing dispute with Washington.
“Currently, we basically conduct negotiations via video link every two weeks, to finalise details,” Fang told a panel discussion at the annual Boao Asia Forum.
“I’m very confident that we will reach an agreement in the near future, so that PCAOB could conduct checks on Chinese accounting firms in China in a reasonable way. This uncertainty will be removed soon, and this will be good news for Chinese stocks listed overseas.”
The Public Company Accounting Oversight Board (PCAOB), the U.S. audit regulator, is demanding complete access to audit working papers of New York-listed Chinese companies.
The request has so far been denied by China on national security grounds – a standoff that could lead to roughly 270 Chinese companies being forced to delist from Amercian exchanges by 2024.
On April 2, China published draft confidentiality rules that would potentially give U.S. regulators access to such working papers, through joint inspections or other form of regulatory cooperations.
Meanwhile, the rules put the onus on Chinese companies to protect state secretes.
There were previous media reports suggesting progress in the U.S.-China talks, but U.S. securities and audit regulators had pushed back on speculation of an imminent deal with China.
In March, the U.S. Securities and Exchange Commission (SEC) identified 11 U.S.-traded Chinese companies, including Baidu Inc (NASDAQ:) and Yum China, that face delisting risks, and the list is growing longer.
Since a change of chairmen at both the SEC and PCAOB, “negotiations between the CSRC-led Chinese negotiation team and them have been progressing very smoothly”, Fang said on Thursday.
He reiterated that “the CSRC’s attitude is to support firms to list overseas, and support firms to choose markets where they want to list”.
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